Retail Food Group (RFG), which owns Gloria Jean’s, Michel’s Patisserie, Donut King, Brumby’s Bakery and Crust Pizza, has announced it will close up to 200 stores by mid-2019.
According to RFG chief executive Andre Nell, a six-month review into the franchising giant revealed between 160 and 200 stores were not sustainable, due to increased rent costs and poor performance in shopping centres, where many of the stores are located.
Nell told The Australian Financial Review the business review has “future proofed” the company.
“It’s very important that we reset the business model now for the future,” he said.
In RFG’s latest financial results, the company reported a loss of $87.8 million for the first half of this financial year, compared to a profit of $32.7 million in the first half of the previous financial year.
Following the results, the company’s stocks hit a ten-year low, falling by 36.3 percent to $1.30 on 5 March.
Negative media coverage, including reports of systemic wage fraud, underpayment of workers and disgruntled franchisees, has also affected the company’s share price over recent months.